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November 23, 2020
Welcome to the SPAC Research weekly newsletter.

Who Owns All The SPAC shares?
SPACs raised over $32bn in Q3 of 2020, and the size of the space nearly doubled.
Now that all the 13Fs have been filed for the quarter that ended 9/30/2020, we can use our 13F portfolio tool to look at each fund's individual SPAC book.
We've heard about how many new front-end SPAC investors were brought into the product in Q3. So we wanted to try and estimate how much SPAC paper is in the hands of historical market participants vs. new entrants. We added up the market value of SPACs owned by the top 10, top 25, and top 75 SPAC portfolios from all 13F filings at each of the last four quarterly endpoints. Then we compared that to the amount of cash in SPAC trust accounts at those same dates.

We're not exactly measuring fractional ownership of the entire space, because our numerator (the market value of 13F holdings) is marked-to-market, while our denominator (trust accounts) is more static. But it's a close enough approximation to get a sense of flows over time.
You can see that the top 10 holders (the yellow line above) used to have an almost 40% ownership ratio but that number has dipped to 26% at the end of Q3. And the top 75 holders (the blue line) had over 80% in June but dropped under 70% by September. SPAC securities are unquestionably being held by a larger number of market participants than ever before.

The decrease above probably understates the change in how much issuance from Q3 was absorbed by traditional SPAC Mafia types. The amount of cash in SPAC trust accounts almost doubled from $29bn to $58bn during the quarter, but the turnover on the existing $29bn was likely fairly low -- at least compared to the changing composition of the book for new IPOs.

Below is a look at the trajectory of SPAC cash in trust over the past four quarters.

We charted the size of a handful of funds' SPAC book at each date (all AUM figures in $mm):
Millennium added more than $1.5bn of SPAC paper in Q3, and Magnetar added more than $1bn as well. Other funds' trajectories are a bit flatter.
And the 10 relative newcomers shown below absorbed more than 10% of the total SPAC issuance in Q3. (Though it's worth noting that nearly half that amount was their collective $1.6bn allocation to Pershing Square Tontine Holdings (PSTH)).
There's likely a lot more we can learn from these 13F filings and we hope to add a few filters to holder detail pages such as sector focus in the future. But there's one more item we want to point out this week.

We've noted this year that while most SPAC investors are still yield-seeking, healthcare appears to be an area with more fundamental investors participating in IPOs. We'd heard plenty of stories of SPAC arb funds being shut out of allocations to hot healthcare IPOs in favor of those fundamental investors, and the 13Fs from this quarter bear that out.

You can see that a handful of funds including RA Capital, Cormorant, EcoR1, Logos, Deerfield, RTW Investments, Perceptive Advisors, Bain Capital Life Sciences and Boxer Capital have all built SPAC portfolios in Q3. Their collective holdings only really include healthcare SPACs. And those funds, most of which are SPAC sponsors themselves, dominate the ownership table of warrantless biotech SPACs like Panacea, BCTG, Health Sciences II, Research Alliance and FS Development.

It's an exciting development for the world of SPACs to have investor rosters filled with fundamental funds that are more likely to take any given deal seriously. If sponsors don't have to recycle the entire shareholder base at deal announcement, it's much easier to find a good deal that can perform well over time.

News From the Past Week

New S-1's
  • Far Peak Acquisition Corporation (FPAC) filed to raise $550mm for an acquisition in fintech. FPAC is a sequel to Far Point Acquisition Corporation (FPAC), which raised $633mm in June 2018 and acquired tax free shopping payments provider Global Blue (NYSE:GB) in August 2020. CEO Thomas Farley and CFO David Bonanno will both return from Far Point. Farley is former president of the NYSE and Bonanno was a managing director at Third Point LLC, Dan Loeb's $14bn+ hedge fund that sponsored Far Point (but is not involved with Far Peak). BlackRock is an anchor investor in Far Peak, participating in both founder shares and private placement warrants. Wells Fargo is sole book-runner.
  • Liberty Media Acquisition Corporation (LMAC) filed to raise $500mm for an acquisition in media, digital media, music, entertainment, communications, telecommunications and technology. CEO Gregory Maffei is CEO of Liberty Media Corp., billionaire John Malone's media conglomerate known for complex corporate structures. The SPAC includes a $250mm forward purchase commitment for supervoting shares and warrants from its sponsor. Citigroup, Morgan Stanley, Credit Suisse and Goldman Sachs are joint book-runners.
  • Highland Transcend Partners I Corp. filed to raise $250mm for an acquisition in disruptive commerce, digital media and services, and enterprise software, with a primary focus on North America and Europe. CEO Ian Friedman is the former co-head of Goldman Sachs Investment Partners, a tech-focused growth equity team. Chairman Bob Davis was the founder and CEO of early search engine Lycos. Goldman Sachs and JP Morgan are joint book-runners.
  • Jaws Spitfire Acquisition Corporation (SPFR) filed to raise $250mm for an acquisition in consumer technology and related businesses in North America and Europe. SPFR is the second SPAC chaired by Barry Sternlicht, who founded the $60bn alternative investment manager Starwood Capital in 1991. Sternlicht's resume also includes the consolidation of Starwood Hotels & Resorts Worldwide (formerly NYSE: HOT), among other high-profile public market transactions. Sternlicht's first SPAC, Jaws Acquisition Corp. (JWS), raised $690mm in May 2020 and announced a business combination with seniors-focused healthcare delivery platform Cano Health earlier this month. Credit Suisse is sole book-runner.
  • Nebula Caravel Acquisition Corp. (NEBC) filed to raise $250mm for an acquisition in technology. NEBC features the team from TWC Tech Holdings II Corp. (TWCT), which raised $600mm in September 2020 and is currently seeking an acquisition in technology and technology-enabled services. CEO Adam Clammer and the rest of management served similar roles for Nebula Acquisition Corp. (NEBU), which raised $275mm in January 2018 and acquired tech-enabled lending services platform Open Lending (NASDAQ: LPRO) in June 2020. The SPAC sports a $100mm forward purchase agreement with its sponsor and others. Depending on the level of FPA commitments funded by its sponsor, NEBC's promote may only vest if common stock achieves a $12 price threshold. Deutsche Bank is sole book-runner.
  • Revolution Acceleration Acquisition Corp (RAAC) filed to raise $250mm for an acquisition in financial services, healthcare, technology, consumer and media. CEO John Delaney is the co-founder and former CEO of CapitalSource Incl (NYSE: CSE), a middle-market lending business, and co-founder and former CEO of HealthCare Financial Partners, Inc. (NYSE: HCF) a provider of commercial financing to small and medium-sized healthcare service companies. Delaney also served in the US House of Representatives from 2013 to 2019, including terms on the Financial Services Committee and the Joint Economic Committee. RAAC's promote features a built-in earnout with vesting thresholds up to $35 per share. Credit Suisse is sole book-runner.
  • HumanCo Acquisition Corp. (HMCO) filed to raise $225mm for an acquisition in health and wellness in the US. HMCO is co-chaired by Jason Karp and Rohan Oza. Karp is the chairman and co-founder of Hu, a US snack company, and Oza is co-founder and managing partner of CAVU Venture Partners, which invests in firms in the food and beverage and consumer goods sectors. CAVU has agreed to purchase $25mm of units at IPO. Citigroup is sole book-runner.
  • Fortress Value Acquisition Corp. III (FVT) filed to raise $200mm without a specific sector focus. FVT is the fourth SPAC sponsored by Fortress Investment Group (see here for a full history). Fortress' SPACs have closed two deals in 2020, MP Materials Corp. (NYSE: MP) and Vivint Smart Home (NYSE: VVNT), both of which currently trade over $16. Deutsche Bank is sole book-runner.
  • Trepont Acquisition Corp I (TACA) filed to raise $200mm for an acquisition in software, communications, artificial intelligence, machine learning, data, analytics, 5G, IoT, cloud, edge, security, services and related areas. Chairman Arun Sarin is the chairman of Cerence Inc. (NASDAQ:CRNC), an automotive software company, and is on the board of directors of Accenture plc (NYSE: ACN), Cisco Systems, Inc. (NASDAQ: CSCO), and Charles Schwab Corporation (NYSE:SCHW). Credit Suisse is sole book-runner.
  • Adara Acquisition Corp. (ADRA) filed to raise $100mm for an acquisition in consumer products and related sectors. Chairman Thomas Finke has served as chairman and CEO of global financial services firm Barings LLC since December 2008. CEO Martin Sumichrast is chairman of cbdMD, Inc. (NYSE:YCBD), a nationally recognized producer and distributor of consumer cannabidol (CBD) products. ThinkEquity is sole book-runner.
  • Americas Technology Acquisition Corp. (ATA) filed to raise $100mm for an acquisition in TMT. Chairperson Lisa Harris is the founder of Align Capital, an Austin, Texas-based private equity firm. CEO Jorge Marcos has more than 10 years of experience in private equity focused on energy and natural resources. Advisors Luca Giacometti and Alberto Recchi and Director Alberto Pontonio serve as executives for Galileo Acquisition Corp. (GLEO), which raised $138mm in October 2019 and is currently seeking a business combination. EarlyBirdCapital is sole book-runner.
  • DD3 Acquisition Corp. II (DDMX) filed to raise $100mm for an acquisition in Mexico or of a Hispanic business in the United States. DDMX is a sequel to DD3 Acquisition Corp. (DDMX), which raised $56mm in October 2018 and acquired direct-to-consumer company Betterware de Mexico (NASDAQ:BWMX) in March 2020. The SPAC includes a $50mm forward purchase agreement with funds affiliated with Baron Capital Group, Inc. and MG Partners Multi-Strategy Fund LP, with those same investors indicating an interest to purchase $20mm of units at IPO. EarlyBirdCapital is sole book-runner.
  • Frazier Lifesciences Acquisition Corporation (FLAC) filed to raise $100mm for an acquisition in biotechnology. CEO James Topper is managing partner of Frazier Life Sciences, the investment team of Frazier Healthcare Partners, a private equity and venture capital firm. Topper has represented Frazier as a board member on numerous life sciences investments, many of which included exits via sale to large public biotech companies. Credit Suisse is sole book-runner.


Deal News

  • CIIG Merger Corp. (CIIC) announced a deal to acquire commercial electric vehicle producer Arrival. The deal reflects an enterprise value of $5.4bn and includes a $400mm PIPE anchored by BlackRock, Fidelity, and Wellington. The transaction is expected to close in Q1 2021.
  • Longview Acquisition Corp. (LGVW) announced a deal to acquire Butterfly Network, Inc., a digital health company working to enable universal access to superior medical imaging. The deal reflects an enterprise value of approximately approximately $1.5bn and includes a $175mm PIPE led by Eldridge and Fidelity. The transaction is expected to close in Q1 2021.
  • Roth CH Acquisition I Co. (ROCH) announced a deal to acquire PureCycle Technologies, a leading innovator in polypropylene recycling. The deal reflects an enterprise value of approximately $826mm and includes $90mm in equity private placements and a $250mm fully-committed PIPE anchored by Sylebra Capital. The transaction is expected to close in Q1 2021.
  • Trident Acquisitions Corp. (TDAC) signed a binding LOI to combine with Lottery.com, an Austin, Texas-based company enabling consumers to play state-sanctioned lottery games from their mobile app. Lottery.com's advisory board and existing investor base includes notable venture capital and gaming investors such as DraftKings CEO Jason Robins. No valuation or company metrics were provided.

  • B. Riley Principal Merger Corp. II (BMRG) closed its acquisition of Eos Energy Storage on Monday 11/16/2020, with 37% of public shares exercising redemption rights. Ordinary shares and warrants are now trading on the NASDAQ as “EOSE” and “EOSEW.”

  • Orisun Acquisition Corp. (ORSN) closed its acquisition of Ucommune on Tuesday 11/17/2020. Ordinary shares and warrants are now trading on the NASDAQ as “UK” and “UKOMW.” Redemption statistics have not yet been provided.

  • CF Finance Acquisition Corp. (CFFA) closed its acquisition of GCM Grosvenor on Tuesday 11/17/2020. After 9.5mm public share redemptions at the approval meeting, approximately $120.4mm remained in the trust account at deal closing. Ordinary shares and warrants are now trading on the NASDAQ as "GCMG" and "GCMGW."

  • Fortress Value Acquisition Corp. II (FAII) closed its acquisition of MP Materials on Tuesday 11/17/2020 with less than 1% of public shares exercising redemption rights. Ordinary shares and warrants are now trading on the NYSE as “MP” and “MP/W.”

  • Legacy Acquisition Corp. (LGC) closed its acquisition of Onyx Enterprises on Friday 11/20/2020. Legacy's warrants were amended to receive variable cash and stock consideration to be determined based on the aggregate gross cash in LGC’s trust account at closing. Ordinary shares begin trading on the NYSE on Monday 11/23/2020 as “ID.”

  • GreenVision Acquisition Corp. (GRNV) may terminate its deal with Accountable Healthcare (AHA) due to the termination of AHA's acquisition of Jupiter Medical Group, Primary Care Associates and Health Promoters LLC. GRNV stipulates the purchase agreement terminations represent a material adverse effect and has given AHA 10 days to cure it.

  • Bloomberg reported that Forum Merger III Corporation (FIII) is in talks for a deal with Electric Last Mile Solutions, an electric vehicle startup.

  • Bloomberg reported that GigCapital3, Inc. (GIK) is in talks for a deal with Lightning EMotors, a fleet electrification company.

IPOs
  • Dragoneer Growth Opportunities Corp. II (DGNS) raised $240mm in an upsized IPO for an acquisition in software, internet, media, consumer/retail, healthcare IT or financial services/fintech. DGNS is listed as common stock with no warrant coverage.

  • Aequi Acquisition Corp. (ARBG) raised $200mm in a downsized IPO for the acquisition of a data-centric, growth-oriented consumer company. Units contain one-third warrant coverage.

  • Omnichannel Acquisition Corp. (OCA) raised $200mm in a downsized IPO for an acquisition in omnichannel businesses -- technology-enabled cross-channel retail and consumer services, including direct-to-consumer and e-commerce across a number of consumer-related verticals. Units contain one-half warrant coverage.

  • Cascade Acquisition Corp. (CAS) raised $200mm for an acquisition in financial services. Units contain one-half warrant coverage.

  • Pine Island Acquisition Corp. (PIPP) raised $200 in a downsized IPO for an acquisition in defense, government service and aerospace. Units contain one-third warrant coverage.

  • Reinvent Technology Partners Z (RTPZ) raised $200mm for an acquisition in consumer internet, mobile gaming, or broader technology. Units contain one-fifth warrant coverage.

  • Zanite Acquisition Corp. (ZNTE) raised $200mm for an acquisition in aviation, aerospace and defense, urban mobility and emerging technology. Units contain one-half warrant coverage.

  • L&F Acquisition Corp. (LNFA) raised $150mm in a downsized IPO for an acquisition in governance, risk, and compliance (GRC) and legal technology and software. Units contain one-half warrant coverage.

  • Population Health Investment Co. (PHIC) raised $150mm for an acquisition in healthcare and therapeutics. Units contain one-third warrant coverage.

  • Jiya Acquisition Corp. (JYAC) raised $100mm for an acquisition in biopharmaceuticals. JYAC is listed as common stock with no warrant coverage.

  • Kingswood Acquisition Corp. (KWAC) raised $100mm in a downsized IPO for an acquisition in financial services with a focus on the wealth management, financial advisory and investment management sectors. Units contain three-fourths warrant coverage.

  • OTR Acquisition Corp. (OTRA) raised $100mm in a downsized IPO without a specific sector focus. Units contain one-half warrant coverage.

  • Consonance-HFW Acquisition Corp. (CHFW) raised $80mm in a downsized IPO for an acquisition in life sciences. Units contain one-third warrant coverage.

Charter Extensions
  • LOAC extended its charter through 5/29/2021 with a $0.05 per share monthly contribution to trust and less than 1% of public shares exercising redemption rights.
Upcoming Meetings and Deadlines
  • 11/24/2020 LACQ Charter extension meeting (liquidation date 12/1/2020)
  • 11/24/2020 MFAC Charter extension meeting (liquidation date 11/30/2020)
  • 11/25/2020 KCAC QuantumScape approval meeting
  • 11/30/2020 TDAC Charter extension meeting (liquidation date 12/1/2020)
  • 12/1/2020 GMHI Luminar approval meeting
  • 12/3/2020 GIX Charter extension meeting (liquidation date 12/10/2020)
  • 12/3/2020 THCB Charter extension meeting (liquidation date 12/7/2020)
  • 12/4/2020 HCCH Fusion Fuel approval meeting

Links
  • Bloomberg reported that Credit Suisse is advising scooter company Bird Rides, Inc. on potential SPAC transactions.
  • Reuters reported that boutique investment bank Perella Weinberg is seeking to go public via a SPAC.
Disclosures: Site administrators may maintain positions in various SPAC securities and may trade in or out of those securities at any time without notice. Information from spacresearch.com is provided for informational purposes only and should not be relied upon as the basis for any investment decision. Nothing on spacresearch.com is a recommendation or solicitation to buy or sell any investment.